Question of the Day - 03 May 2018

Given that most of the news items about Steve Wynn’s alleged sexual misconduct broke late in the first quarter of 2018, we won’t know if room rates or occupancy percentages at Wynn Las Vegas and Encore have declined until the second-quarter results are released.

That being said, Wynn Resorts has considerable incentive to flood the market with discounts, in our view.

For one, they might believe they have to “prove” the value of the Wynn brand, thereby justifying keeping the name on the buildings.

Another would be — if customers are indeed recoiling from Wynn — to bring business back.

A third would be to conceal any decline in business from the public, which, if it's true, would lead to Wynn Resorts trying to maintain its value on the stock exchange, although if there’s a drop in average daily rates, stock-pickers would notice it.

It’s too early to judge the potential toxicity of the Wynn brand in Las Vegas, though we note the company has begun referring to in-progress Wynn Paradise Park simply as “Paradise Park”). Still, it’s already proving fatal in Massachusetts, where the company is under heavy pressure to rename Wynn Boston Harbor. Both Governor Charlie Baker (Republican) and Attorney General Maura Healey (Democrat) have weighed in with demands that the property be called something else. A name change would also probably play well with the Massachusetts Gaming Commission, which is pretty steamed that Wynn Resorts failed to disclose a $7.5 million Steve Wynn paternity settlement when the company was being licensed. Wynn Boston Harbor President Robert DeSalvio told the MGC that a name change is “under active consideration right now.”

To what might it be changed? The evidence points to “Encore Boston” … including the company’s acquisition of nine relevant domain names, including EncoreBoston.com, encorebostonharborcasino.com, and encorebostonjobs.com. And apparently, if anyone has noticed that it’s a bit odd to label as “Encore” a property for a company that has never operated in Massachusetts before, they haven't brought it up yet.

“According to a person familiar with the discussions,” Wynn Resorts CEO Matt Maddox has even considered selling the property outright.

By the time you read this, MGM Resorts International may have sprung a purchase offer for the entire Wynn Resorts company. But MGM is restricted to one casino license in Massachusetts and is on the verge of opening a megaresort in Springfield, which leaves room for a third-party sale. There’s no word on who the prospective buyer of the $2.4 billion casino might be, but Sheldon Adelson is from the Boston area and is newly flush with over a billion dollars from the sale of Sands Bethlehem in Pennsylvania. Just sayin’.